The most effective virtual data rooms have intuitive interfaces that are easy to use, as well as powerful reporting systems. They also feature robust security features that guard sensitive information from unauthorized access. They offer multi-factor authentication and advanced encryption. They also offer granular permissions to control who is able to view the documents, print, copy or download documents. They can have an hierarchical structure of folders with primary categories and subcategories. They also have standardized names for documents, a master index and a variety of filters and search options.
Many industries utilize VDRs. Construction projects often require a large number contractors and suppliers to share information via the VDR. Contractors might be required to review, sign and certify contracts that deal with confidential information. A VDR lets all parties share documents in a secure and efficient manner. In the life sciences, for instance the R&D process requires a lot of collaboration between partners. A VDR assists in the transfer of data and helps to manage milestones in projects.
M&A deals require a significant amount of documentation, and it’s imperative that the documents are kept securely in a controlled environment. A VDR is a great tool for both the buy-side and the sell-side in due-diligence. Venture capital and private equity firms analyze multiple deals simultaneously, and have to organize reams of sheets of data for each. A VDR helps them keep the track of all their different contracts as well as financial statements and other documents in a secure environment.
It is essential that the documentation be easy to understand for potential investors. For instance the current cap table will help investors comprehend how equity in the company is divided between the founders and other shareholders. The VDR should contain an user guide that is clear and concise, and includes instructions on how to navigate, search, and access the system. The system should also contain a log of who has viewed which documents and how long they’ve been viewed.